US STOCKS-S&P 500 hits record high as Nvidia results butress AI rally

By Noel Randewich and Johann M Cherian

Aug 28 (Reuters) - The S&P 500 hit a record high on Thursday after Nvidia's quarterly report fell short of investors' high expectations while confirming that spending related to artificial intelligence infrastructure remains strong.

Shares of Nvidia NVDA.O dipped almost 1% after Sino-U.S. trade uncertainties prompted the leading AI chip designer to exclude potential China sales from its quarterly forecast late on Wednesday.

Investors viewed Nvidia's report, including a 56% surge in quarterly revenue, as confirmation that demand related to AI technology remains strong, supporting a rally in AI-related stocks that has propelled Wall Street to record highs in recent years.

AI heavyweights Microsoft MSFT.O and Meta Platforms META.O gained about 0.5%, while Amazon AMZN.O climbed 1.1%. AI chipmaker Broadcom AVGO.O added 3%.

"Nvidia is such an outlier that to say it was a disappointing print is only against the bar of borderline impossible expectations," said Ross Mayfield, an investment strategy analyst at Baird. "It's clear that the primary structural driver of this market, which is AI, is not going anywhere or cooling down."

The S&P 500 was up 0.25% at 6,497.88 points, hitting a record high for a second straight day.
The Nasdaq gained 0.54% to 21,705.67 points, while the Dow Jones Industrial Average was up 0.05% at 45,587.83 points.

Six of the 11 S&P 500 sector indexes rose, led by communication services .SPLRCL, up 1.04%, followed by a 0.6% gain in information technology .SPLRCT.

Nike NKE.N climbed 0.2% after the sports apparel seller said it was cutting less than 1% of its corporate workforce as it struggles to reclaim market share lost to rivals.

Reducing worries of a slowing economy, weekly jobless claims were lower than expected, while a separate report showed corporate profits rebounded in the second quarter.

Expectations that the Federal Reserve will soon cut interest rates to shore up economic growth have contributed to Wall Street's recent gains.

The spotlight is on Friday's Personal Consumption Expenditures data, and any signs of inflation increasing could temper broad expectations for easing at the Fed's policy meeting in September.

Traders are pricing in more than an 80% chance of an interest rate cut next month, according to CME Group's FedWatch.

On Thursday, Fed Governor Lisa Cook filed a lawsuit challenging U.S. President Donald Trump's attempt to remove her from office earlier this week.

Coming later in the day are remarks from Fed Governor Christopher Waller, who is perceived as favoring lower interest rates and is among the candidates being considered to replace Fed Chair Jerome Powell next year.

Data analytics company Snowflake SNOW.N surged 22% after raising its forecast for fiscal 2026 product revenue, citing AI demand.

HP Inc HPQ.N rose 2% after beating quarterly revenue estimates on growing demand for AI-powered personal computers.

Packaging food company Hormel Foods HRL.N tumbled 13% after issuing a downbeat quarterly profit forecast.

Declining stocks outnumbered rising ones within the S&P 500 .AD.SPX by a 1.7-to-one ratio.

The S&P 500 posted 27 new highs and four new lows; the Nasdaq recorded 105 new highs and 37 new lows.